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The Olympics are coming to Japan, but COVID-19 cases are rising


January 7, 2021.

Japan was one of the markets to see the most obvious rebound in domestic air travel after the first wave of COVID-19 cases across the country and had even established some key international business travel corridors. It is now though on the verge of entering a state of emergency as the country grapples with soaring COVID-19 and other coronavirus cases, a number of which have been linked to more infectious variants (image via CTC).


This week daily confirmed cases exceeded 6,000 for the first time since the start of the outbreak last year. Ahead of any more stringent control measures the Japanese government has already begun considering suspending new entries of foreign nationals under business travel agreements with 11 countries and regions, including China and South Korea, in an effort to curb COVID-19 spread.


Japanese domestic air capacity had bounced back quickly in mid-2020, although domestic travel was not shut down to the same degree as in other countries, it was still cut back dramatically by government movement restrictions. International services have remained in the doldrums despite the business travel corridors and airlines will continue to have very little international feed to their domestic networks for some time. They will have to rely on Japanese local travel for the immediate future, something of a reversal in the importance of the domestic and international markets in Japan. A relatively flat population growth and the spread of the high-speed rail network has meant that Japanese airlines have kept growth low in their domestic networks in recent years, instead focusing on international markets for traffic and network expansion opportunities. Now, however, the airlines are heavily reliant on their domestic divisions.


COVID-19 has prompted major strategic reviews by Japan’s two largest airlines, and one of the most significant results is an increase in focus on LCCs. This includes the establishment or expansion of widebody low cost operations to serve international markets. Both All Nippon Airways and Japan Airlines are trimming back their mainline fleets by advancing the retirement of widebody aircraft. In contrast, their LCC units are being boosted. This reflects changes in demand outlook that the airlines foresee. Premium business travel is expected to remain weaker for longer, with leisure traffic and travel for friends and family visits predicted to bounce back faster when border restrictions are eased. ANA believes – as do many other airlines – that virtual meeting technology will be a long term drag on business travel.


“Japan’s airline market has always been different,” says CAPA – Centre for Avi